Northern Trust Earnings: Here’s Why Investors are Selling Shares

Northern Trust Corporation (NASDAQ:NTRS) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 3.75%.

Results: Net income increased 28.8% to $167.7 million (69 cents per diluted share) in the quarter versus a net gain of $130.2 million in the year-earlier quarter.

Revenue: Decreased 6.63% to $969.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Northern Trust Corporation reported adjusted net income of 69 cents per share. By that measure, the company missed the mean analyst estimate of $0.75. It missed the average revenue estimate of $985.1 million.

Quoting Management: Frederick H. Waddell, Chairman and Chief Executive Officer, commented, “Fourth quarter and full year performance continued to reflect solid core trust fee growth amidst a challenging operating environment. We achieved strong new business success while also completing the integration of two important acquisitions.

Throughout the year, we focused on the needs of our clients and on improving the profitability and returns of our business. Our return on equity of 9.3% in 2012 improved from 8.6% in 2011 and our capital actions, including an increase in the quarterly dividend to $0.30 per share and the repurchase of 3.5 million common shares, returned $449.8 million in capital to our shareholders.”

Key Stats:

Revenue decreased 7.65% from $1.05 billion in the previous quarter. Net income decreased 6.21% from $178.8 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.77 to a profit $0.76. For the current year, the average estimate has moved down from a profit of $2.95 to a profit of $2.88 over the last ninety days.